HOW COMPANIES CAN MANAGE TRANSFORMATIONS EFFECTIVELY

HOW COMPANIES CAN MANAGE TRANSFORMATIONS EFFECTIVELY

Four key lessons CEOs must keep in mind when leading organisations through a transformation phase

SAMEER NAGPAL

World over organizations go through transformation for a variety of reasons. Some change to renew themselves in response to altered market dynamics, others transform to stay relevant, scale up operations, improve profitability, switch over from being owner driven to professionally managed, create new markets, regain competitive edge, among other reasons. Every transformation is unique and there is no ‘one-size-fits-all’ guidebook to lead change successfully. In my varied experience of starting new businesses, scaling up, entering new segments and turning around established companies, I have learnt a few valuable lessons that may be useful to other business leaders.

Lesson One: Don’t delegate crucial steps

Every strategic business shift starts with situation analysis, then moves to strategy formulation and then to laying out the execution plan. These are crucial stages where the organization’s problem statement is studied, desired end-state visualized and critical steps to bridge the journey mapped. A business leader should not delegate these steps to an external strategist or his own strategy team. These are hard, make or break decisions and a leader cannot risk going wrong.

You will see that as a business leader, your ability to understand and transport learnings across scenarios and past experiences will help you come up with solutions to your current predicament. Besides, only you can switch between the 100 feet and the 100,000 feet view, so your involvement is invaluable.

My message to leaders is, get involved right at the analysis phase to gain first-hand understanding of the environment, market dynamics, competition and consumer needs. Visit customers, talk to your frontline, commission research, sit in focus group discussions, do your cost-benefit analysis, and then think back, connect the dots and cross-pollinate your learnings.

In Shalimar Paints, when we embarked on a transformation journey to make it a high growth, high margin company after decades of losing market share, it was evident that we needed to change our focus from the industrial segment to the more profitable and faster growing decorative (home paints) segment.

However, it seemed that the formidable advertising and marketing spends by top companies would be a huge barrier. I decided to spend significant personal time to understand the consumer decision making process and buying behavior and soon I could connect the current situation to an earlier experience in electronic security business. Just like burglar alarm systems, consumers do not derive day to day utility from paints, making them a low involvement category and hence, brand could not be the driver of purchase. On digging deeper, it emerged that painters yielded much higher influence on the consumer’s purchase decision than the brand itself. Thus we could move forward with a home-paint business strategy with ‘painters’ as our key focus segment.

Such crucial strategic decision making should not be delegated. You will see that as a business leader, your ability to understand and transport learnings across scenarios and past experiences will help you come up with solutions to your current predicament. Besides, only you can switch between the 100 feet and the 100,000 feet view, so your involvement is invaluable.

Lesson Two: Get the right people

People drive change and as a leader steering change, you need to have an extremely competent and skilled team that is aligned and motivated at the same time. While putting together your core team, remember to retain a fine balance between industry outsiders who bring unbiased, fresh perspectives and industry insiders who bring domain knowledge and expertise. One without the other will deprive you of the right mix.

During one of my assignments with Ingersoll Rand, we forayed into the residential air-conditioning business with a breakthrough product in a crowded, me-too market. My years of experience in the air-conditioning category helped me strategize the context that was needed for a blue-ocean product to survive. But it was the team of technologists with no prior experience in air-conditioning industry who could actually create a unique, differentiated product by integrating wireless technology into it.

The second key to talent selection is to get people with the right attitude and frame of mind. Transforming businesses present evolving, dynamic situations and not everyone can fit in such VUCA (volatile, uncertain, complex and ambiguous) environments. While hiring look for passionate people, who love challenges and have demonstrated performance working in chaotic, complex or changing business environments.

Once you have put together the right team, you need to align the larger organization towards the strategic shift. People are often the biggest barrier to change and in an old company like Shalimar Paints, aligning internal stakeholders was a big challenge. Populating change agents, creating an environment of open, transparent and frequent communication and building a performance and reward driven culture helped overcome this hurdle.

Lesson Three: Execution holds the key

It is often said, and not without reason, that execution is the hardest part of a transformation.The first step here is thinking through the execution. Plan for changes in the internal and external operating systems and processes, design the data and intelligence systems you will need and map your deliveries and targets.

The second step in execution is staying in control by treating it like a project. Set up a project management team akin to a command and control centre, review rigorously, keep a close watch on all metrics and don’t let any part of the change ecosystem slacken.

At Shalimar, we had to deal with several simultaneous changes such as remodeling dealer network, rolling out a painter strategy, re-jigging supply chain, upgrading plants, filling product gaps, and others.  To manage this effectively, we put in place a project management system that helped track progress and resolve issues on time.Treating it like a project will keep the urgency alive, speed up execution and help to stay in control of all the moving pieces.

Lesson Four: Something will always go wrong

Despite all your sincere efforts, given the unpredictability and dynamics of the real-world, something will still go wrong. The most difficult part for a leader is to accept failure given the amount of personal energy and commitment he/she puts into the project. My suggestion to leaders is be prepared for setbacks and stay flexible for change. Don’t become rigid if it doesn’t come together like you had envisaged. Go back to the drawing board, think afresh and rework. Like they say, failure is not falling down, but refusing to get up.

At Shalimar, the initial channel strategy that we had developed did not give the expected results and we were forced to go back to the market, much to the chagrin of many of our team members. But as we gave up resistance and went back to the drawing board, we were enlightened with many other aspects that we included in our reworked program and the outcomes were far superior.

Talking of the challenges of change, I remember Nelson Mandela’s golden words:

It always seems impossible until it’s done.

And that summarizes managing a business transformation. It may be difficult and full of hard lessons, but the opportunities it throws up and the valuable lifelong learnings it gives you, far outweigh the experience of managing steady-state businesses.